Takeda Announces Establishment of its Wholly-owned Subsidiary at Shonan Research Center which Supports Drug Discovery to Drive Innovation

May 14, 2017

-Takeda Splits off a Part of its Pharmaceutical Research Businesses to the New Company via Simple Absorption-type Company Split-

Osaka, Japan, May 15, 2017 ―Takeda Pharmaceutical Company Limited (TSE: 4502) (“Takeda”) today announced that it has entered into an agreement for an absorption-type company split with its wholly-owned subsidiary (“Succeeding Company”) which was established in April, 2017, aiming to transfer a part of Takeda's pharmaceutical research businesses to Succeeding Company.

Takeda is in the process of implementing steps to accelerate its research and development (R&D) transformation by focusing on three key therapeutic areas – Oncology, Gastroenterology and Central Nervous System, plus Vaccines, and concentrating R&D activities in Japan and the U.S. This transformation is critical to provide the company with the necessary organizational and financial flexibility to drive innovation, enhance partnerships, and improve R&D productivity for long-term, sustainable growth.

In alignment with this transformation, Takeda will transfer some of its Research businesses, including some portion of molecular screening, chemistry, biology, drug metabolism and pharmacokinetics (DMPK), and nonclinical safety research, to Succeeding Company. This will enable Takeda’s R&D organization to optimize organizational efficiency with the aim to generate true innovation.

Succeeding Company will provide integrated research support including drug discovery consulting for a broad range of diseases. The support will range from exploratory research and optimizing candidate compounds, to bridging clinical research not only at Takeda, but also for external research institutions and bio-venture companies. With deep drug discovery expertise across these value-added services, Succeeding Company aims to contribute to the innovation in Japan as well as outside of Japan.

“The bar for delivering crucial new medicines to patients is constantly being raised and, in response, new, more flexible and efficient R&D models that can tap scientific innovation across the globe are required,” said Andrew Plump, M.D., Ph.D., Director, Chief Medical and Scientific Officer at Takeda. “This new company will help fill a critical gap in the drug discovery process in Japan by providing a bridge to translate basic research into new medicines.”

This company split enables Takeda to further develop its cutting-edge drug discovery platform, as well as broaden the possibility of the discovery of new innovative medicines at the Shonan Research Center, where the company is aiming to establish the “Health Innovation Park” which would concentrate a great amount of expertise into one location. These initiatives lead to realizing Takeda’s mission of “Striving towards Better Health and a Brighter Future for people worldwide through leading innovation in medicine.”

Since the company split is an absorption-type company split carried out between Takeda and its wholly-owned subsidiary, certain details are omitted from disclosure, in line with the Tokyo Stock Exchange disclosure guidelines.

1. Details of company split1) Schedule of company split

Date of establishment of Succeeding Company

April 27, 2017

Date of decision on company split by the Director delegated by the Board of Directors

May 15, 2017

Date of conclusion of absorption-type company split agreement

May 15, 2017

Effective date of the company split

July 1, 2017 (scheduled)

(Note) The company split is to be conducted by Takeda in accordance with Article 784, paragraph 2 of the Companies Act. Accordingly, no approval by a general meeting of shareholders as defined in Article 783, paragraph 1 of the Companies Act is required.

2) Method of company splitIn this company split, Takeda will be the splitting company and Succeeding Company will be the succeeding company.

3) Details of stock allocationAs consideration for the company split, Succeeding Company will issue 9,800 shares of common stock and allocate them to Takeda.

4) Treatment of stock options and corporate bonds with stock options for the splitting companyAlthough Takeda has issued stock options, there will be no change in the treatment of these stock options due to the company split.

5) Increase or decrease of capital stock due to the company splitThere will be no increase or decrease of the capital stock of Takeda.

6) Rights and obligations to be succeeded by the succeeding companySucceeding Company will succeed to the assets relating to the business to be split off in accordance with the terms and conditions of the absorption-type company split agreement, as well as the rights and obligations incidental thereto.

7) Capability of satisfying liabilitiesTakeda has judged that Succeeding Company will not have any problem in performing its obligations relating to the liabilities it will bear following the effective date of the absorption-type company split; however, Takeda will not be liable for Succeeding Company's liabilities as a guarantor.

2. Outline of the companies

Splitting company (as of March 31, 2017)

(1)

Company name

Takeda Pharmaceutical Company Limited

(2)

Location

1-1, Doshomachi 4-chome, Chuo-ku, Osaka 540-8645, Japan

(3)

Representative

President & CEO: Christophe Weber

(4)

Scope of business

Research and development, manufacturing, sales and marketing of pharmaceutical products, etc.

(5)

Capital

65,203 million yen

(6)

Date established

January 29, 1925

(7)

Number of shares issued

790,521,195 shares

(8)

Fiscal year end

March 31

(9)

Major shareholders and ratio of shares held

Nippon Life Insurance Company

The Master Trust Bank of Japan, Ltd. (Trust account)

Japan Trustee Services Bank, Ltd. (Trust account)

JP Morgan Chase Bank 380055

Takeda Science Foundation

6.42%

5.32%

4.62%

4.31%

2.27%

(10) Financial results of the previous fiscal year (consolidated, IFRS)

Total equity

1,894,261 million yen

Total assets

4,355,782 million yen

Equity attributable to owners of the company per share

2425.92 yen

Revenue

1,732,051 million yen

Operating profit

155,867 million yen

Profit before income taxes

143,346 million yen

Profit attributable to owners of the company

114,940 million yen

Basic earnings per share

147.15 yen

Dividend per share

180.00 yen

Succeeding company (as of April 27, 2017)

(1)

Company name

PRE Business Preparation Company

(2)

Location

26-1, Muraokahigashi 2-chome, Fujisawa, Kanagawa, 251-0012, Japan

(3)

Representative

Representative Director : Hideki Igata

(4)

Scope of business

Providing outsourced drug discovery research services, etc.

(5)

Capital

10 million yen

(6)

Date established

April 27, 2017

(7)

Number of shares issued

200 shares

(8)

Fiscal year end

March 31

(9)

Major shareholders and ratio of shares held

Takeda Pharmaceutical Company Limited

100%

3. Outline of the business to be split off from Takeda to the succeeding company1) Details of the business to be split offThe portion of the business to be split off is a part of Takeda’s business related to drug discovery research services that is operated by Takeda's Research.

2) Financial results of the business to be split offThe business has not recorded external revenue.

3) Book value of assets and liabilities to be split off (as of March 31, 2017)

Assets

Liabilities

Item

Book value

Item

Book value

Current assets

0 yen

Current liabilities

330 million yen

Fixed assets

1,010 million yen

Fixed liabilities

190 million yen

Total

1,010 million yen

Total

520 million yen

4. Status after the company split1) There will be no change in Takeda’s company name, location, representative, scope of business, capital and fiscal year after the company split.

2) The amount of Succeeding Company's capital will increases from 10 million yen to 100 million yen through the company split.

3) Name and representative of the succeeding company will be changed immediately after the effective date of the absorption-type company split, i.e. July 1, 2017 (scheduled), subject to the approval of the amendment to the Articles of Incorporation (Company Name) and change of representative by the resolution of Succeeding Company shareholders’ meeting. The new company name and representative has not yet been decided.

5. Future outlookTakeda’s financial forecast for FY2017, which was announced on May 10, 2017, includes the impact of this company split.

(Reference) Consolidated earnings forecast for this fiscal year (as of May 10, 2017) and consolidated results for the previous fiscal year (in million yen)